I had an idle glance at the state of London United's finances today, and I was a little surprised to see that it reported a pretty substantial loss in its last financial report (published earlier this year).
The most recent set of accounts available is for the 2019 calendar year, prior to any impact from the coronavirus crisis (the company does not have to publish its accounts for the year ending 31 Dec 2020 until the end of September 2021).
The company's income statement for the year ending 31 Dec 2019 shows a loss after income tax of £7,660,000, compared with a profit of £639,000 during the year ending 31 Dec 2018. During the year prior to that (10 Dec 2016 to 8 Dec 2017), it reported an after-tax profit of £5,870,000.
Notably, its latest reported loss of £7,660,000 includes a hefty £5,722,000 of "exceptional items", which include:
Note: "UMC business" refers to the terminated United Motorcoaches division.
In its Notes to the Financial Statements, the company explained in relation to the above items:
I'm guessing the "routes terminated early" refers to the transfer of the E10 and E11 to Abellio in mid-2019 (were any other routes unexpectedly lost during that year?).
However, the last sentence of the above quote has left me confused. The E11 was previously an NCP route, but that quote strongly implies that
more than one former NCP route was lost during 2019. Aside from the E11, NCP operated the 33, 272, 283, 419 and 440 - all of which are still London United routes; and the 493, which was lost to London General in 2012 (and therefore isn't relevant to routes lost "during the year" of 2019). So what am I missing here?
Setting aside my confusion, it's interesting to get a broad overview of London United's financials, along with the various insights that such documentation affords. For example, it offers some sense of how slim the profit margins for London's bus operators can be. During its 2018 reporting period, LUB's operating profit (before financing considerations and tax) of £599,000 came from a considerable £182,972,000 of revenue, less £182,373,000 of expenses. That's a whole lot of business to end up with relatively meagre pre-tax profits - and in 2019, revenue also dropped 5%, while costs fell by less than 1%. It's no surprise, then, that £1.4m was spent during 2019 on restructuring the business to (potentially, at least) make it more efficient and cost-effective.
And without offering any judgement or opinion on the current dispute with its workforce, it certainly explains why RATP is so aggressively pursuing changes to reduce its employment costs. Indeed, in its latest financial report, London United says:
Notably, London United appears to suggest that the impact of coronavirus on its finances for the 2020 year may not be as catastrophic as you or I might first imagine.
Currently, London United says its "directors believe the Company's continuing focus on operational efficiencies and quality will enable the Company to generate a satisfactory result next year" - but it remains to be seen if it can sufficiently cut costs, improve its efficiencies and return to even a modest profit when it publishes its next set of results.